South Africa Reserve Bank Releases Position Note on Necessity of CBDC
The South African Reserve Bank (SARB) released its Position Paper and accompanying Background Note on November 26, 2025, after years of research, technical experimentation with distributed ledger technology (DLT), stakeholder consultations, and analysis of payment behaviors. These documents assess whether South Africa requires a retail Central Bank Digital Currency (CBDC)—a digital rand for public use by individuals and businesses—as cash declines amid digital payment growth. SARB concludes that while retail CBDC proves technically feasible via intermediated or hybrid models and could preserve public access to central bank money, no compelling immediate need exists for issuance.
Persistent Cash Dominance in Payments
Cash endures as South Africa's primary payment instrument despite digital advances, used by 99% of adults for groceries and preferred by 71% overall due to instant settlement, universal acceptance, privacy, and no perceived fees. It dominates 56% of payment volume (21% value), especially among rural/township residents (60% population), low-income earners (70% under ZAR3,000/month), informal sector workers (19% employment, ZAR600-750bn economic value), and the 16% unbanked. Post-COVID, notes/coins as GDP share fell below trend but stabilized, mirroring emerging market patterns where cash supports inclusion amid connectivity gaps and infrastructure limits (ATMs stable/declining, POS grew to 800k+).
Rapid Digital Payment Evolution
Digital channels expanded dramatically: PayShap processed 260 million transactions (ZAR215bn) by March 2025 with 10-second settlements; EFT credits claim 90% retail value; debit cards 55%; banking apps/internet banking rose post-COVID. POS devices surged via fintechs/QR codes, projecting cash share drop from 33% (2023) to 26% (2027). Yet barriers persist—70% banked access accounts <3x/month, 37% withdraw immediately citing fees, trust issues, and non-POS suitability—while crypto/stablecoins emerge (700k merchants via QR, 2.3% awareness) raising sovereignty risks.
CBDC Technical Feasibility and Design
SARB pilots validated retail CBDC using BIS models: intermediated (private handling of retail, central wholesale ledger) or hybrid (central ledger oversight), enabling offline use, programmability, and interoperability without bank disintermediation (via caps) or stability threats. As central bank liability, it mirrors cash's safety, targeting EMDE goals like inclusion, efficiency, resilience, and NPS enhancement amid stablecoin/crypto growth.
Lessons from International CBDC Projects
Over 40 jurisdictions inform SARB: Nigeria's eNaira (0.0018% M3, 98.5% inactive wallets); Bahamas' Sand Dollar (<1% circulation, merchant gaps); ECCU's DCash (low uptake from education failures); successes stress partnerships, onboarding, and value beyond incumbents. EMDEs emphasize inclusion; advanced economies efficiency—South Africa aligns hybrid needs without rushing.
SARB's Strategic Priorities and Outlook
Immediate focus: NPS modernization via Project Stimela (PayShap enhancements, QR standards, non-bank/e-money inclusion, open finance) to balance cash-digital parity and stress resilience. No retail issuance now, but long-term readiness for public digital money as cash marginalizes; pivot to wholesale CBDC for markets, remittances, DLT innovation—forthcoming plans. Risks (cyber, privacy, runs) mitigable by design; ongoing monitoring ensures agility. Documents at resbank.co.za provide policymakers, researchers, and stakeholders evidence-based context.